Although Brexit will dominate the political agenda in the coming months irrespective of which party wines on Thursday, I hope the next Government adopts a more coherent policy on pension saving.……….

……  Pension annuities

Pension annuities get a bad press.  Often missold by big insurance companies, usually mis-bought by retirees and sometimes horribly inflexible.  But a lot of the time they work wonderfully well and prove outstanding value for money, as my parents discovered.

Twelve days ago, my father died at the grand old age of 90 from pneumonia.  A life well lived and we celebrated it two days ago as we finally laid him to rest.

For nigh on 25 years, my father and mother enjoyed a near four-figure monthly payment from their annuity with Aviva.  It ensured a quality of life as Stan The Man drifted into full-time retirement, having spent a working life as a successful commercial salesman in the clothing trade.  He could have sold ice cream to the eskimos, so good was he at selling.

In later life, he transferred all his energy into gardening, trimming sky high hedges while perched precariously on a wobbly ladder until well into his late 80s.

With Dad’s passing, the pension annuity will live on.  This is because it includes a spouse’s payment which means my mother will get two-thirds of what they previously received for the rest of her life.

Although my Dad often wished that his monthly payments had risen in line with inflation (said, of course, with hindsight logic), there is no doubt that their annuity has been great value for money.

So a big thank you to Alan Steel of Linlithgow-based independent financial adviser Alan Steel Asset Management who back in the early 1990s sat down with my parents (over a glass or two of Rioja) and helped convert their private pension into lifetime income.  Not for just one life but two. 

If ever there was an advert for taking advice when retiring and converting a pension fund into lifetime income, and to demonstrate the better side of annuities, you have just read it.

Both (advice and annuities) are as relevant today as they were when Stan The Man retired.

Both are best combined.

Excerpt courtesy of the Mail on Sunday